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Southwest Risk Management Training for Priority Commodities. by Trent Teegerstrom Russell Tronstad Ursula Schuch Dept of Ag. & Resource Economics and Plant Sciences The University of Arizona, Tucson AZ. Arizona Risk Management Workshops. Topics Covered in Workshops.

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Southwest Risk Management Training for Priority Commodities


Trent Teegerstrom

Russell Tronstad

Ursula Schuch

Dept of Ag. & Resource Economics and Plant Sciences

The University of Arizona, Tucson AZ


Topics Covered in Workshops

  • Influence of Quality and Season on Hay Market Decisions
  • Ranch Restocking and Other Mgt Decisions
  • Record Keeping / Financial Risk Management
  • Hands On Computer Training: Some Basics for Any Business
  • Basic Financial Statements

Example of Decision Tools

  • Crop Mix/Diversification
  • Long Term Herd Evaluation
  • Animal ID Systems
  • Farm and Ranch Cash Flow
  • Crop Insurance

Bulkiness of Alfalfa Relative to Other Field Crops, 2003

  • 70% of hay is consumed on the farms & ranches where grown.

U.S. Hay Prices by State, 2003

  • Location
  • Dairy Feed Demands
  • Quality

Wtg. Avg. $92.9/ton








Estimated Yuma Mean Price Seasonality

  • Hay Price is a function of:
  • lagged prices
  • seasonality (polynomial w/ constraints)
  • simultaneous error structure

Market Implications

  • Substitution: dairy vs. feedlots/horses
  • Prices below (above) long-term averages -- mean reverting
  • Volatility after August (low & OG)
  • Storing alfalfa in April has the lowest expected payout
  • Lower price volatility by going for highest quality -- cost/risk??

Restocking Worksheet

Herd Planning

-- Multi-Year Restocking Path (5 yrs)

-- 20-year returns in current dollars

Multiyear Budgets

-- Cash production and management costs

Ranch Investments

-- Amortization of assets.


Avg. Real Steer Prices: Gila County Sale

Inflation Adjusted Prices Declining --


Capital Available

Biological Productivity

Initial Herd

Market Prices

Restocking Path


Cummulative Returns

Grazing Capacity


Inputs: Yields, Prices, & Costs



Production Costs


Monthly Water & Labor Constraints

Water Use

Water Flow

Annual Water Limit


Absolute Dollar Risk Exposure

Crop Insurance

Dollars at Risk


Work To Date!

  • 12 Workshops and Presentations Across Arizona
  • 1299 Individuals Attended Workshops and Presentations
  • 694 of the 1299 Were Producers
  • 120 Individuals Received Hands-on Computer Training

Western Centers Risk Mgt Project

  • Extended our Focus to Labor Mgt Issues in the Arizona Nursery and Landscape Industries

Topics Covered in Workshops

  • Nursery marketing decisions
  • Reducing risk associated with musculo-skeletal disorders (WMSDs)
  • Heat stress management in the workforce
  • Communication between supervisers/foreman/workers
roles and responsibilities of an agricultural employer

Roles and Responsibilities of an Agricultural Employer

Need to Be a Manager

* Functions of Management

* Types of Activity in Managerial RolesManagers’ TheoriesRecognizing and Managing RisksManaging for Compliance and BeyondEssentials for the ManagerGetting up and Keeping up as

a Manager of People


Work To Date

  • Published and distributed bookmarks on Heat Stress Informational in English and Spanish
  • Heat Stress article in the American Nurseryman (national trade magazine)
  • Five Conference Presentations
  • Over 375 individuals receiving materials and training